Trade minister courts China for softwood as U.S. announces duties

OTTAWA â€” With Canada and the United States at war over softwood lumber, the Liberal government decided the time was right to look eastward for a new customer: China.

The prime minister announced the decision after a meeting with the Chinese premier.

Sound familiar?

It happened in September 2005, between Liberal prime minister Paul Martin and Hu Jintao, then the most powerful person in China. A year later, Canada and the U.S. signed the softwood truce that kept the peace until Monday, when the Trump administration announced duties of up to 24 per cent on Canadian lumber imports.

On Tuesday, International Trade Minister Francois-Philippe Champagne was in Beijing with a coterie of Canadian softwood lumber industry players in his entourage. Well aware of the latest escalation in the dispute, he said his visit to China would help find much-needed new markets for Canadian wood.

“This is caused by a protectionist industry in the U.S.,” Champagne said in an interview. “My answer to that is we are looking at all sorts of options to obviously support our industry.

“If our industry becomes more diversified, that’s going to help, and we won’t find ourselves in the same position going forward.”

Champagne said Canada’s pitch is resonating in China because softwood is an environmentally friendly building material that can satisfy a need for more housing without driving up greenhouse gas emissions.

“There’s an imperative in China to have more green building material. That’s exactly what we’re here for,” he said, adding that Canada and China are teaming up to battle one of the greatest challenges of our time: climate change.

But experienced China watchers say Canada needs a coherent plan to meaningfully engage with China, and has to avoid sporadic overtures of interest in doing business there when it runs into trouble with the United States.

Wenran Jiang, a University of Alberta expert on China, said it is not only Liberal governments that have fallen into that trap, as Martin did in 2005 with softwood.

Jiang pointed to former Conservative prime minister Stephen Harper’s decision to try to find more Chinese customers for Canadian oil after Barack Obama mothballed a decision on the proposed Keystone XL pipeline, which would have carried oilsands bitumen to the Gulf of Mexico.

“We need a strategy,” said Jiang. “Otherwise, we fall back into the traditional kind of dynamics: we go to China when we need to, when we face barriers with the U.S., and when times are a little bit better we forget about China.”

In 2011, China became British Columbia’s top market for softwood lumber exports for the first time, surpassing the U.S., but those transpacific exports have since declined relative to the U.S.

Jiang said Canada’s pursuit of a free trade deal with China as well as well as engaging it as partner on climate change are all steps in deepening economic relations.

But the Trudeau government’s preoccupation with how to deal with the Trump administration has stalled its much-vaunted re-engagement with China over the last five months, said Paul Evans, a China relations expert at the University of British Columbia.

The “surge” of this past week, which included Finance Minister Bill Morneau joining Champagne in Beijing for the start of a high-level political and economic dialogue with China’s vice premier, came at an opportune time, Evans said.

“China’s curiosity about Canada right now is a lot bigger than softwood lumber,” said Evans, who was also in Beijing this week.

Trump’s anti-Canadian trade tirades could soften the ambivalence many Canadians feel about deepening economic co-operation with China, he said.

“Trump has accentuated the necessity for Canada to look for other kinds of markets, not because the United States isn’t important, but because the United States is now seen as unpredictable and unstable.”